1.1 Partnerships

Michael and George have been in partnership for several years, sharing profits and losses in the ratio 3:4. At 1 January they had the following credit balances on their capital and current accounts:

Capital $ Current $

Michael 65,000 11,486

Donald 80,000 9,637

The partnership statement of profit or loss for the year to 31 December shows a net profit of $28,595, and the partners had made drawings of $16,500 each.

Required: Calculate the balance of Michael's current account at 31 December

2.Payables and Accruals

At 31 October the balance on the payables control account in Mark's general ledger is

$79,850 and the total of the list of balances on the personal accounts is $79,310. Mark has

discovered that the difference is because a payment for $60 was entered correctly in the day

book but was recorded as $600 on the supplier's account.

Required:

Calculate the correct value of creditors to be reported on Mark statement of financial

position at 31 October.

3.Corporations and Dividends

Zeus Ltd declared a final dividend to its shareholders at the Annual General Meeting on

31.12.2017 of $1,200,000.

The amount was finally paid on 31.3.2018.

Required:

Prepare the Journal Entries for the declaration and distribution of the dividends in 2017 and

2018

4.Corporations and type of stock

Compare and contrast (5 points) common stock and preferred stock.

5.Accrued Expenses

On January 13, 2018 Astra Ltd is preparing to close its financial statements for the year 2017.

At that date is has calculated the following accruals for 2017:

Electricity for December 2017 $2,000

Water for December $650

Audit fees for the year 2017 $5,500

On March 13 2018, it has paid the above expenses in full, however audit fees actually paid

were $5,000 since the auditors decided to give a discount to the company.

Required:

Prepare the journal entries for 2017 and 2018 taking into account the above.

6.Contingent Liabilities

Describe what is termed as "contingent liabilities" and discuss their accounting treatment (5 points).